South Korea saw a positive sign for global expansion on Friday, as exports bounced back to growth in May, following robust demand for semiconductors.
Data from the Ministry of Trade, Industry and Energy (MOTIE) showed that exports rose to 13.5 percent year on year in May to $50.9 billion, its fastest pace since outbound shipments climbed 22 percent in January.
Exports rebounded from a 1.5 percent decline in April and surpassed forecast of a 12.7 increase.
Economist Lim Hye-youn said the downturn last month was temporary from base effect and that exports are not doing bad at all.
The huge exports rise should come as good news for Asia’s fourth-largest economy, which has been trying to find a way to deal with challenges brought by a soft improvement in the job market, weak domestic consumption, and global trade row, amid the tariff dispute between the US and China.
Stringent export tariffs by the US have raised concerns that it may push several countries, including China, South Korea’s trading partner, to carry out countermeasures that will just worsen trade tensions further.
Exports in China edged 30 percent higher to $13.9 billion in the previous month, its second-highest monthly total on record, while the US climbed 11.8 percent to $6.2 billion.
Imports were up 12.6 percent to $44.3 billion, beating growth expectations of 10.7 percent, but coming out lower than the 14.5 percent gain achieved in April.
The recent figures left trade surplus of $6.7 billion in May, which was slightly higher than $6.6 billion in the previous month.
The ministry stated that this marks 76 consecutive months in which South Korea’s exports have outperformed imports and the third straight month that exports exceeded the $50 billion target.
The country’s cumulative exports added 8.2 percent in the first five months of the year to mark a record of $246.4 billion.
The KOSPI index closed up 0.6 percent higher to ₩2,438.96 on Friday.
South Korea’s Semiconductors Hit Record High
South Korea’s semiconductor output became the main driver for exports in May, surging a record high of 44.5 percent to $10.9 billion on brisk sales of high-value memory chips and storage devices, with an increase of 15.8 percent in machinery products.
Memory chip shipments, which dominate the country’s exports, could have alleviated concerns over a sluggish performance in the technology cycle.
Economist An Ki-tae said going forward, export growth rate may fluctuate, depending on base effects from 2017’s monthly data, but An expects overall values to remain good, and even after excluding semiconductors, other sectors, including petroleum products and machinery are increasing.
A rebound in global demand brought overseas sales of petrochemical goods 26.8 percent higher.
Progress in the semiconductor sector and fiscal spending are expected to strengthen South Korea’s economy by 3 percent this year. The country’s economy grew 1.0 percent in the first quarter from the previous three months, which was a bit lower than the earlier estimate of 1.1 percent.
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